Correlation Between SAI Old and Applied Digital

Can any of the company-specific risk be diversified away by investing in both SAI Old and Applied Digital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SAI Old and Applied Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SAI Old and Applied Digital, you can compare the effects of market volatilities on SAI Old and Applied Digital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SAI Old with a short position of Applied Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAI Old and Applied Digital.

Diversification Opportunities for SAI Old and Applied Digital

0.03

Correlation Coefficient

SAI Old  Applied Digital

Significant diversification

The 3 months correlation between SAI and Applied is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SAI Old and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital and SAI Old is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SAI Old are associated (or correlated) with Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of SAI Old i.e., SAI Old and Applied Digital go up and down completely randomly.

Pair Corralation between SAI Old and Applied Digital

Considering the 90-day investment horizon SAI Old is expected to generate 1.62 times more return on investment than Applied Digital. However, SAI Old is 1.62 times more volatile than Applied Digital. It trades about 0.19 of its potential returns per unit of risk. Applied Digital is currently generating about 0.08 per unit of risk. If you would invest  93.00  in SAI Old on October 25, 2024 and sell it today you would earn a total of  24.00  from holding SAI Old or generate 25.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	25.0%
Values	Daily Returns

SAI Old  vs.  Applied Digital

SAI Old

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days SAI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak basic indicators, SAI Old demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Applied Digital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAI Old and Applied Digital

The main advantage of trading using opposite SAI Old and Applied Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAI Old position performs unexpectedly, Applied Digital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Applied Digital will offset losses from the drop in Applied Digital's long position.

The idea behind SAI Old and Applied Digital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.